China Telecom looks to 4G for growth after almost flat 2014

18 MAR 2015

China Telecom, the country’s third largest mobile operator, reported a very slight increase in profit and revenue last year after a small recovery in H2 and data gains made up for losses in mobile and fixed voice. And the company made it clear it sees 4G deployment as key to driving future growth.

Its net profit for the year ending 31 March inched up 0.8 per cent to CNY17.68 billion ($2.8 billion), while its EBITDA fell 1.8 per cent to CNY95.85 billion. Overall revenue was up 0.9 per cent to CNY324 billion (missing analyst estimates), with service turnover increasing 3.1 per cent to CNY287 billion.

Its mobile customer base, which fell by five million in H1 and hit a low of 180 million in July, rebounded strongly in the second half, finishing the year with 185.62 million – up slightly (40,000) from December 2013.

The company said it added 15 million 3G/4G subscribers. 3G/4G users now make up 67 per cent of its customer base — up 8 points from the end of 2013.

Terminal sales were down sharply – falling 16.3 per cent to CNY31.3 billion – due to the government ordering operators in July to reduce their handset subsidies.

Overall mobile ARPU was down 1.5 per cent to CNY54, while 3G/4G ARPU fell 5.6 per cent to CNY67.50.

Wireline revenue, which still accounted for 58 per cent of total service revenue, rose 1.2 per cent to CNY167 billion. Voice was down 13 per cent to CY33.58 billion and data expanded 5.4 per cent to CNY129.5 billion.

Fixed broadband revenue was up 3.8 per cent as it grew its broadband customer base 7 per cent to nearly 107 million. Its FTTH subscriber rose 59 per cent to 43 million.

4G rollout
With the issuance of nationwide FDD-LTE licences last month, the company’s chairman, Wang Xiaochu, said it will now increase its network investments and leverage the national tower sharing company to push the rapid development of mobile services, enabling it to profitably scale up its 4G services. “Looking ahead, we have full confidence,” he said.

China Telecom’s capex for this year is forecast to increase 40 per cent to CNY107 billion, with mobile infrastructure investment more than doubling from last year to CNY63 billion. Its total capex in 2014 was CNY3.4 billion lower than the planned CNY80 billion, which was due to the limited scope of earlier hybrid 4G trials.

It aims to add 200,000 4G base stations this year, raising its total to 320,000.

Overall expenses increased just 0.6 per cent to CNY295 billion.

It will issue a dividend equivalent to HKD0.095 per share, which is the same level as in 2013.

Author

Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...